Leo drags uncle into Telecel wrangle

Shakeman Mugari

PRESIDENT Robert Mugabe has been sucked into the Telecel Zimbabwe ownership wrangle after his nephew, Leo Mugabe, tried to muscle-in on the telecommunications company using his uncle’s name.


Telecel Zimbabwe is 60%-owned by Telecel International through Egyptian company, Orascom, while the remaining 40% is held by Empowerment Corporation (Pvt) Ltd (EC), a company owned by local businesspeople and organisations.


In what appears to be a clear case of influence-peddling, Leo is understood to have threatened groups forming the EC with unspecified action if they refused to restructure their shareholding according to his plan.


Documents from the Registrar of Companies show that the shareholders of EC are Kestrel Corporation owned by runaway businessman James Makamba, Selphon Investments owned by businesswoman Jane Mutasa, and the National Small Scale Miners’ Association (NSSMA).


Integrated Engineering Group (IEG), through which Leo was supposed to have been a shareholder in EC when it was formed in 1998, failed to pay for the stake.


Documents available to the Zimbabwe Independent show that Leo’s IEG failed to pay for the stake in 1998 after its cheque of $140 000 to the CBZ, the then bankers of EC, bounced. The CBZ wrote to EC confirming that Leo’s company had not paid for the stake because his cheque had been dishonoured.


“We wish to confirm that a cheque of $140 000 deposited by IEG was dishonoured by their bankers with the response ‘refer to drawer’,” said a letter written to EC by the CBZ.


This means that IEG does not have shares in EC. Other members paid for their shareholdings. Over the years Leo has however maintained he owns 10% of EC even though he has not paid for the shares.


In January this year he made frantic efforts to muscle into the EC, saying he had special instructions from President Mugabe.


Documents show that in January Leo called a meeting with EC shareholders at the Zimbabwe Farmers Union (ZFU) offices and informed them that he had been given a directive by the president to change the shareholding structure of the company.


His plan was to amass additional shares in the company to make him the largest shareholder in the consortium and earn a place on the Telecel board. He told the shareholders at the meeting that he had a “presidential directive” to change the shareholding of EC.


Sources say he also threatened to get some of the shareholders arrested if they failed to comply with the “presidential directive”.


A lawyer from Chinyama & Associates, representing Mutasa, one of the shareholders, wrote to Leo inquiring about the “presidential directive” which he claimed to have. Leo failed to produce the directive.


“Our client notices that throughout the meeting Mr (Leo) Mugabe was constantly referring to the shareholding structure to be done in line with a ‘presidential directive’ which he said was communicated to him by the executive,” said the letter to Leo.


“With due respect, our client would want a copy of the said ‘presidential directive’ to enable them to analyse.” Leo was given seven days to produce the directive.


Leo failed to produce the directive but continued to push for a change in the structure of EC. Using the president’s name, he then proceeded to call another meeting at the ZFU offices on March 15 where he changed the share structure without shareholders’ approval. He said he still had a stake in EC and so did other members like the ZFU which had also failed to pay for the shares in 1998.


He also brought back to life a war veterans’ organisation, Magamba Echimurenga Housing Scheme (MEHS), which had long sold its shares in EC to Makamba.


At the meeting Leo distributed a 30% stake in EC that had been warehoused for future disbursement.


He gave Kestrel 5% to increase its stake to 20% and he gave himself 5% in addition to the 10% he claimed to have. He also distributed 5% each to NSSMA, MEHS, ZFU and IBWO.


“Thus Mr Leo Mugabe proposed that 9% of (former) Native (shares) and 30% warehoused (shares) be shared equally by six groups,” said minutes of the meeting compiled on that day.


Native Investments pulled out of EC and its shares were acquired by Makamba.


Leo proceeded to design a shareholders’ agreement which was however not signed by the shareholders. The EC consortium needs the signature of Makamba to change the shareholding as he holds a majority stake in the grouping.


Leo could not be reached for comment all week as his phone went unanswered.